Big Tech’s massive AI spending is causing another problem for investors

The bottom-line-padding, stock-price-fueling stock buyback from hyperscalers may now be on pause as they spend aggressively on AI infrastructure.

Combined buybacks for Alphabet (GOOGL), Amazon (AMZN), Meta (META), Microsoft (MSFT) and Oracle (ORCL) — aka the country’s main AI hyperscalers — fell to a mere $4.4 billion in the third quarter, per numbers crunched by the Kobeissi Letter. This marks the lowest dollar amount spent dating back to the third quarter of 2017. The third quarter also represented the third straight quarter buybacks have been below $5 billion.

Share repurchases for this group have dropped a stunning 90% since the $45.9 billion peak recorded in the fourth quarter of 2021.

“The era of massive Big Tech stock buybacks is over,” the Kobeissi Letter team said.

Cash once allocated to buybacks is being funneled into an array of AI projects at the hyperscalers.

The numbers on AI capex are getting more staggering by the day.

Combined capital expenditures for Amazon, Microsoft, Alphabet, Meta, and Oracle are tracking toward approximately $800 billion in 2026.

This unprecedented infrastructure sprint is fueled by aggressive investments in power generation, data centers, and advanced AI accelerators.

Wall Street analysts project the cohort’s aggregate capital spending will surge past $1.2 trillion in 2027.

Brian Sozzi is Yahoo Finance’s Executive Editor, host of the Sozzi Unleashed morning show, the ‘Power Players With Brian Sozzi’ podcast and a member of Yahoo Finance’s editorial leadership team.